By Ben Atonko & Ladi Patrick
Adamu Kasimu is a fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and erstwhile president of the institution. He is a critical stakeholder in the land swap project. He represents BGD Properties in land swap. BGD Properties awarded Shereti Cheche A District has been invited by the Federal Capital Territory Administration (FCTA) for scrutiny and possible return to site. Speaking with Viewpoint Housing News in Abuja, Kasimu counted losses as investors had put down N350 million six years ago in the now suspended Land Swap project, saying such money would have yielded huge profit if invested in treasury bills. He appealed to the FCT Minister Muhammad Bello to create a Special Purpose Vehicle for land swap and get the programme immune from the vagaries of the civil service bureaucracy. The valuer absolved former FCT Minister Bala Mohammed of any wrong doing saying the major obstacle to implementation of land swap is bureaucracy.
Viewpoint: After going through the bidding process and being awarded a district, what happened?
Kasimu: Well, I think first thing is to know the concept of land-for-infrastructure programme of the FCT administration. The federal government observed that it can’t sustainable continue to provide infrastructure to districts in FCT. Having fully serviced Phase One, that is A01 to A09 – A09 is just being serviced. That’s Guzape and with lots of difficulties servicing Phase Two which currently, only Gudu, Jabi, Utako and perhaps Katampe Extension can be said to fully serviced in Phase Two.
The demand for land is increasing and the federal government is finding it difficult to provide services to the remainder part of Phase Two, talk more of Phase Three. So government decided to invoke its powers under the Land Use Act to enter into special contract with developers by assigning districts to developers to provide infrastructure of the quality as they are in Phase One in return for a percentage of land.
And there was a general bid. I’m aware, not less than 15 companies were shortlisted in the last administration. Most of the companies went far…they performed to a particular level before the whole thing came to a stop.
Viewpoint: Why did it stop?
Kasimu: To the best of my knowledge, there are about three reasons. One, there was this problem of resettlement. It was so difficult to settle the people that are on the land. The concept of resettlement as envisaged in the land-for-infrastructure framework, that’s the document wasn’t adhered to.
Two, funds were not readily available onshore. Each company is supposed to spend not less than N40 billion and if you have 15 companies spending N40 billion, you know what that means to our economy. So offshore funding became expedient. That hasn’t taken place.
The third and the most important is politics – political situation in the country. There was a change from one party to another so there were litigations and this really affected the project.
Viewpoint: But when stakeholders were brought into this project, former FCT Minister Bala Mohammed assured all that Land Swap policy was with safety nets. That body could come and stand on its way.
Kasimu: Bala Mohammed was right!
Viewpoint: So why are investors lamenting today?
Kasimu: We’re not lamenting. Let me tell you from our own perspective, our own company. We were ready, we almost awarded the contract for our own district. But what held us was not the polity. What held us was resettlement. If government had allowed us to implement our own resettlement programme, we would have been far. The issue is all about resettlement.
Viewpoint: Wasn’t there a template for resettlement? Why was yours different?
Kasimu: Good. The framework spoke about implementation of resettlement Action Plan based on international best practices which as BGD, we designed our resettlement plan to implement but we couldn’t go in and start any resettlement activity without the approval of FCDA [Federal Capital Development Authority]. They haven’t granted us the approval up till today. For what reason? It’s not Bala Mohammed’s problem. It’s bureaucracy that’s holding us.
Viewpoint: We heard that some companies have been called to go back to site. Is BGD one of them?
Kasimu: Yes we are one of the companies.
Viewpoint: Is there something BGD has done that others haven’t done?
Kasimu: Yes. Compliance with milestones. Bala Mohammed made mention of the fact that there were safety nets and safeguards. So also there were expectations from the investors. There are milestones that each participant is to achieve. We achieved all! Some didn’t. Some didn’t even deposit the N350 million.
Viewpoint: So how did they become captured in the project as investors?
Kasimu: I can’t speak on that but I can speak for myself.
Viewpoint: What can BGD Properties do in Shereti Cheche A District?
Kasimu: A world class district if FCDA will give us the go ahead to start our resettlement programme. We are good to go.
Viewpoint: If you were to meet the FCT administration headed by Muhammad Musa Bello today, what strategically would you suggest be done about land swap?
Kasimi: One, I would like the administration to understand that we’re talking about multi-billion naira project and it will be very difficult if the quantum of this is allowed to go through the vagaries of the civil service [bureaucracy]. Investors don’t have time for government bureaucracy. They want things to be done fast. If decisions are taken, they want immediate implementation.
The Abuja Infrastructure Investment Centre, that is AIIC which is the driving force behind the land swap project isn’t enough. There’s the need for FCT administration to create a Special Purpose Vehicle, an SPV for land swap!
Abuja Infrastructure Investment Centre can be a supervising body but there should be a land swap office under the office of the minister so that every action that is required, decision can be taken fast and implementation done quickly.
In fact, there’s nothing wrong in the minister having a land swap secretariat. For you to leave land swap hanging – sometime we’re with the Perm Sec, sometime we’re with AID, sometime Director Resettlement, Executive Secretary – and you’re spending this kind of money. It doesn’t show some business…there’s no alignment business wise, on the government side. We need things to be done fast by establishing a special agency for land swap in FCT.
Viewpoint: As a valuer, could you quantify the losses you have suffered as a result of the suspension of this programme?
Kasimu: Like for my company, initially, we were to execute this project within the range of N42 billion and N45 billion but because of the suspension, it’s now costing us about N60 billion to do the same project.
Unfortunately, when we evaluated the project, the land value some five, six years ago was good and measurable. Now, the land value has gone down. So the cost of the project has gone up, while the expected income, not just the income that has gone down, equally the confidence of the market to absorb these plots is now with a big question mark.
I give you example. Currently, there are only two districts that construction activities are going on in FCT, that’s Guzape and Jahi districts. Now, Jahi district that is in Phase Two, 1,000sqm today is sold for around N20 million to N25 million. That’s about N25,000 per square metre. Assuming we apply the same rate in Shereti can we sell at par with Jahi district? We can’t! We’ll sell at a lower amount. So the whole project is hazy and risky.
The cost of going up while the value is going down. The risk is expanding for the investor.
But we believe in Abuja, we believe in the FCT and we believe in the Nigeria project. We’re hopeful that we are going to break even in this country. Reason is that Abuja market imperfect. The property market of Abuja and Nigeria in general is highly imperfect and we want to exploit the opportunities of those imperfections to break even.
Viewpoint: If there are no onshore funds, where are you going to mobilise your funds now?
Kasimu: We have offshore funding option available to us but we couldn’t go forward. Before implementing World Bank acceptable resettlement programme, you can’t access offshore funds for this kind of project. So you don’t just go and pay the Gbagyi people one, two kobo and ask them to leave and think that the funder will give you offshore funding. That’s very difficult. You must show evidence that you have implemented a resettlement action plan that’s prepared in accordance with international best practices. That’s the problem.
Viewpoint: All these years, after putting in money, being ready work but prevented, what have the investors been doing?
Kasimu: Counting our losses. As I informed you, one of the losses is the disproportionate revenue to cost relationship we have had. The whole financial outlook of the project has to be checked.
That’s why we’re also appealing to the FCT administration to reconsider some components of the contract. They should understand that this project, when completed, is a government project.
For the districts that government serviced and distributed to the public, apart from the land charges, it’s earning nothing. So the best thing is to ensure that this project is implemented and by so doing, revenue accruing to government can be got.
Remember, we injected N350 million at the beginning of the project. If we had invested that N350 million for six years now in treasury bills, you know the opportunity cost of that money.
We have lost a lot of cash. We need to be compensated heavily by the government for being responsible citizens, for being committed to the development of the country. I’ve not seen any individual or a corporate body that has the confidence in Nigeria like us.
We lost money but we still have the confidence that given the opportunity, we will go forward and we’ll move this project forward.
Viewpoint: Didn’t you consider legal action against the government?Kasimu: No. The fact is that the contract agreement has arbitration clause. So we have to exhaust all processes. But we can’t say that there’s a breach now.
